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2026 Supreme(Online)(CAT) 5579
CENTRAL ADMINISTRATIVE TRIBUNAL
Rajiv Joshi, J, Anjani Nandan Sharan, Administrative Member
S. K. Sharma – Appellant
Versus
Union of India – Respondent
Original Application No. 948 of 2011
For the Appellants/Petitioners: V. N. Pandey
For the Respondents: Jaswant Singh, Ajay Kumar Rai
The court held that no interest on delayed payment of arrears is warranted if the employer company has been closed down and all dues have already been settled from one-time financial assistance.
Headnote:(A) Service Law - Pay Revision - Arrears of Revised Pay Scale - Interest on Delayed Payment - Claim for payment of arrears of revised pay scale w.e.f. 01.01.1997 along with interest @ 18% per annum - The applicant sought the arrears of revision of pay scale effective from 01.01.1997, as per office order dated 20.07.2008, from 01.01.1997 till the date of superannuation i.e., 31.01.1998, along with interest - The respondents argued that the company was a sick industry and later revived, and payment of arrears was subject to availability of funds from profits as per Government of India's directive allowing disbursement up to 25% of Profit Before Tax (PBT) - The respondents paid the arrears to the applicant's legal heir on 07.09.2021 - The company was closed down with one-time financial assistance from the Government of India - The Tribunal held that in view of the closure of the company and the fact that the arrears had already been paid, no further direction for payment of interest on delayed payment was warranted, and the application was dismissed. (Paras 2, 9, 11, 14)
(B) Administrative Tribunal Act, 1985 - Section 19 - Claim for arrears of pay revision - Delay in payment - The applicant's claim for interest on delayed payment of arrears was not granted as the company was closed down and had no resources to make any further payment, and all dues had been settled with one-time assistance from the Government of India. (Paras 14, 15)
Facts of the case:
The applicant, who was appointed on 27.10.1973 in Bharat Pumps and Compressors Ltd. (BPCL) and retired as Deputy Manager on 31.01.1998, sought payment of arrears of revised pay scale w.e.f. 01.01.1997 as per an office order dated 20.07.2008. Despite representations, the payment was not made due to the company's financial constraints. The company was declared a sick industry and later revived, but payment of arrears was made in stages from 25% of PBT. The arrears were finally paid to the applicant's widow on 07.09.2021. The applicant's legal heirs sought interest on the delayed payment. The company was subsequently closed down with financial assistance from the Government of India.
Findings of Court:
The Tribunal noted that the arrears of 1997 wage revision had already been paid to the wife of the deceased applicant. Considering that the company (BPCL) had been closed down and had utilized the one-time financial grant from the Government of India to settle all dues, no direction for payment of interest on the delayed payment was warranted. The Tribunal dismissed the Original Application with the above observations. (Paras 13, 14)
Issues: The main issue was whether the legal heirs of the deceased applicant were entitled to interest on the delayed payment of arrears of revised pay scale from 01.01.1997 to 31.01.1998, given the financial condition and eventual closure of the respondent company.
Ratio Decidendi: The court ruled that since the respondent company had already been closed down and the arrears of wage revision had been paid to the applicant's legal heir from the one-time financial assistance provided by the Government of India, and the company had no resources to make any further payment, no direction regarding interest on the delayed payment was required. (Paras 14, 15) Result : Original Application dismissed with observations. Interim order discharged. All related MAs disposed of. (Para 15) (No dissenting opinions or alternative viewpoints present.) (Parties: The applicant was an employee of a Government of India enterprise; the respondents included the Union of India and the company.) (Key legal principles: Payment of arrears of pay revision from profits; impact of company closure on claims for interest.) (Supporting quotes from judgment: Para 14 - "In view of above...no direction of this Tribunal is required regarding payment of interest on the delayed payment of arrears...Since payment of arrears of wage revision has already been made to the wife of the late applicant, no further directions are warranted in the instant Original Application.")
| Table of Content |
|---|
| 1. introduction and prayer of the original application. (Para 1 , 2) |
| 2. factual background of the applicant's service and claim. (Para 3) |
| 3. respondents' defense regarding financial constraints and legal proceedings. (Para 4) |
| 4. applicant's reply and reliance on court precedents. (Para 5) |
| 5. court's notice of facts and chronology of events. (Para 6 , 7 , 8 , 9) |
| 6. court's analysis of the arrears payment and related litigation. (Para 10 , 11 , 12) |
| 7. decision: no further claim allowed as company closed. (Para 13 , 14 , 15) |
O R D E R
Delivered by: Mr. Anjani Nandan Sharan, Member (A)
1.Heard Shri V.N. Pandey, learned counsel for the applicant and Shri Jaswant Singh, Shri Ajay Kumar Rai, learned counsel for the respondents.
2. The instant Original Application, under Section 19 of the Administrative Tribunal Act, 1985 , has been filed by the applicant, seeking following reliefs:
“A. To issue order or direction directing the respondents to pay entire amount accrued on revision of pay scale due w.e.f. 01.01.1997 as stated in the office order dated 20.07.2008 till the date of superannuation along with interest @ 18 % per annum expeditiously with in a stipulated time, which is to be framed by Hon’ble Tribunal.
(B) To pass any other order/direction to the respondents which is fit and proper in the instant Original Application.
(C) To award the cost of the application in favour of the applicant.”
3. The facts, as stated by the applicant, are that the applicant (Late S. K. Sharma) was appointed on 27.10.1973 in Bharat Pumps and Compressors Ltd., a Government of India enterprise, and retired on 31.01.1998 as Deputy Manager after attaining the age of superannuation. During the pendency of the Original Application, Shri S. K. Sharma died and is now represented through his legal heir. An office order dated 20.07.2008 was issued for revision of pay scales effective from 01.01.1997, extending the benefits even to employees who had resigned/retired after that said date, making the applicant eligible for arrears w.e.f 01.01.1997 till his retirement i.e. 31.01.1998. However, despite submitting representations dated 08.08.2008 and 20.05.2010, the applicant was not paid arrears for the period in question. Further, vide letter dated 05.06.2010 the applicant was assured that payment would be made subject to availability of funds. Thereafter, the applicant sent a legal notice dated 08.07.2010 to the respondents, but no reply was communicated to him.
3.1 As per the applicant, he had approached this Tribunal by way of filing Original Application No. 1825/2010. The Tribunal directed the respondents to consider the pending representation of the applicant with regard to payment of arrear and pass a reasoned order. However, the respondents rejected his claim on the ground of lack of funds. It is the contention of the applicant that the respondents’ rejection is arbitrary and discriminatory, as similarly placed employees, including those who retired after 7 to 10 years from the applicant, were paid their arrears. While rejecting the claim of the applicant, the respondents have taken the stand of non-availability of funds. However, the applicant has emphasized that as per the statement of the respondents the Government of India clarified that the said company has registered profit in the year 2005-06 to 2007-08. The applicant has further placed reliance upon a similar matter decided by this Tribunal passed in Original Application No. 1619/2011, whereby the respondents were directed to pay the arrear of revised pay scale to the applicant in a period of six months and in case of failure of payment within the said period, the applicants were entitled to interest.
4. The respondents have filed counter affidavit stating therein that M/S Bharat Pumps and Compressors Limited (BPCL) was declared a sick industry and was referred to Board for Industrial and Financial Reconstruction (BIFR) in the year 1995. Thereafter, the Government of India created a Bureau of Reviv
